The data about bankruptcy in the United States is quite concerning. In the past several decades, there has been a discernible spike in the volume of individuals being unable to paying off their obligations, and the United States Congress has only very recently responded to this problem by passing laws that make it more difficult to apply for this position. The reasons listed below are among the most prevalent ones that lead to personal bankruptcy nowadays.
According to the findings of a study that was accepted for publication in the American Journal of Public Health in 2019, it was found that medical issues were the cause of 66.5 percent of insolvencies in the United States. These health problems included things when unable to pay high expenses or time lost from work. Even for those with health insurance, the high premiums, and deductibles, together with the loss of employment, have a significant impact on Americans.
Diseases or injuries that are uncommon or severe can surely result in medical costs that are in the hundreds of millions of dollars. These expenditures can swiftly wipe out long-term savings accounts, as well as cash for college tuition and home equity. When all of these options have been used up, declaring bankruptcy would be the only option remaining, and this is pretty indicative of whether the person or the patients’ families was able to use their health insurance to pay for a part of the debt or not.
Rise In unemployment
Losing one’s work and one’s source of money may be extremely stressful and upsetting, regardless of the circumstances in which it occurs. There are some people who are fortunate enough to get severance benefits, but there are also numerous others who find welfare checks on their workstations or in their closets with next to no prior warning.
It is only going to make matters worse if you do not have an emergency savings to pull from, and it is quite risky to use credit to pay for your payments. According to the findings of the 2019 Financial Security Index Poll conducted by Bankrate, roughly three out of ten Americans do not even have savings in the event that they lose their job or experience another type of financial disaster.
The Process of Separation and Divorce
In a number of different ways, the breakup of a marriage places a significant amount of financial stress on both spouses. First follow the legal bills, which in certain instances can be exorbitant, then comes the division of joint assets, the determination of child maintenance and/or divorce, and lastly comes the continuous cost of maintaining two distinct houses once the divorce is finalized.
Escheatment of wages to repay arrears in child maintenance or divorce can deprive some people of the capacity to pay their other payments, and the attorney expenses alone are enough to convince some people that they need to file for bankruptcy. When one spouse fails to pay the spousal support that is outlined in the agreement, it is common for the other spouse to be left utterly penniless.
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Expenses which are Not Anticipated
Theft or a calamity, such as an earthquake, storm, or tornado, that causes the destruction of assets for which the homeowner is not covered might put some people in the position of having to declare bankruptcy. There are probably a lot of homeowners who are ignorant of the fact that they need to get additional coverage in order to be protected from specific calamities like disasters.
Those that don’t have protection against this kind of risk run the risk of losing not just their houses but also the majority or all of their belongings in the event of a disaster. They not only have to come up with the funds to replace the products, but they also have to locate immediate sources of food and housing in the interim.
Despite the fact that it is extremely unlikely, persons who suffer the loss of their wardrobes as a result of a disaster like this may find that they are unable to dress adequately for their occupations, which may cause them to lose their positions.